World Investment Report 2009: Transnational Corporations - Unctad

122 World Investment Report 2009: Transnational Corporations, Agricultural Production and Development
towards ensuring food security for their populations.
In fact, historically there has been a recurring cycle
of reliance on foreign investment in agriculture. 43
However, inasmuch as the recent food crisis seems
to be the result of a confluence of factors, the drivers
of food-security-related FDI may be less volatile than
before.
Until recently, the availability of underutilized
agricultural land was seen as perhaps the main hostcountry
factor driving for food-security-related FDI
in agriculture (Woertz et al, 2008). However, it is
now increasingly recognized that perhaps the most
crucial factor or driver is not land per se, but rather
the availability of water resources to irrigate the
land. For example table III.11 shows that many West
Asian economies possess very little fresh water (per
capita), and a number of these countries are making
(or considering making) investments in relatively
water-abundant countries and land. It is this critical
water situation that primarily explains why a number
of GCC countries have overturned their decades-old
policy of fostering agricultural production in their
own economies to undertake agricultural investments
in other developing countries, as well as transition
economies. Saudi Arabia is an example of this policy
shift (box V.14). Apart from the GCC, other investor
countries from the South, including China, face severe
water shortages for agricultural production (FAO,
2003; UNESCO, 2009; Xie et al., 2009).
Irrespective of longer term considerations,
South-South FDI that is driven by food security
concerns is currently in a cyclical upswing, but its
scale is not easy to determine because many relevant
deals have only recently been signed; others are being
considered or in negotiation. So far, of the definite
larger scale investments involving land acquisitions
(i.e. outright ownership and long-term leases), the
largest investing countries from the South include
Bahrain, China, Qatar, Kuwait, the Libyan Arab
Jamahiriya, Saudi Arabia, the Republic of Korea and
the United Arab Emirates. The leading developing
host countries are in Africa, with Sudan, Ethiopia, and
the United Republic of Tanzania among the foremost
recipients of investments (figure III.14).
As mentioned earlier, the scale of South-
South FDI for food security cannot be gauged, as the
majority of projects are at early stages of negotiation,
and it is unclear whether they will become actual
investment projects in the future. Nevertheless, the
scale of some of these potential investments is large
and controversial, especially as they affect the existing
use of agricultural lands and the production structures
of host economies, thereby creating major changes
and potential displacements in traditional agriculture
(chapter IV).
Table III.11. Water resources in selected regions and
countries, 2008
(Cubic metres)
Selected West Asian
countries
Regions
Major host countries for investors seeking to
operate farms for food security
Region / country
Fresh water
resources per
capita
Bahrain ..
Iran, Islamic Republic of 1860
Iraq ..
Kuwait ..
Oman 399
Qatar 126
Saudi Arabia 104
United Arab Emirates 49
Yemen 194
Latin America and the Caribbean 24 471
Europe and Central Asia 11 473
Sub-Saharan Africa 5 093
East and South-East Asia, and Oceania 5 022
South Asia 1 230
West Asia and North Africa 757
Australia 24 118
Brazil 29 000
Cambodia 8 642
Ethiopia 1 623
India 1 152
Kazakhstan 4 978
Kenya 581
Myanmar ..
Pakistan 366
Philippines 5 664
Sudan 813
Thailand 3 333
Turkey 3 150
Ukraine 1 127
Viet Nam 4 410
Source: UNCTAD, based on FAO data.
E. Major TNCs in agriculture
and related activities
This section identifies the major TNCs involved
in agriculture and related industries, and examines
their characteristics and competitive or ownership
advantages. Most major TNCs operating in agriculture
and related industries – with the notable exception of
“new investors” – have operated overseas for many
decades. However, a number of them no longer focus
on agricultural activities, trying instead to influence
these activities by controlling and coordinating value
chains via various forms of non-equity participation.
This does not mean, however, that they are entirely
absent from agricultural production (section C). For
example, TNCs in the banana industry still source
about half of their produce from their own plantations
(box III.6). TNCs therefore may be directly involved
in agricultural production, or they may be purchasers
of agricultural output, or key suppliers of critical
inputs to agriculture, or distributors of that production,
or they may internalize downstream activities such as
processing, marketing, branding and merchandising
downstream outputs.